European stocks traded mostly flat on Tuesday, with markets lacking clear direction as investors waited for several major monetary policy decisions in the final month of the year.
As of 03:05 ET (08:05 GMT), Germany’s DAX rose 0.1%, the U.K.’s FTSE 100 gained 0.1%, while France’s CAC 40 slipped 0.1%.
Global monetary policy in focus
European markets ended Monday’s session lower, a weak start to December, though indices remain on course for strong annual gains. Expectations of a Federal Reserve rate cut next week continue to support sentiment.
Both the DAX and FTSE 100 are tracking gains of more than 18% for 2025, while the CAC 40 is up around 10%, held back by domestic political uncertainty.
Traders now price in an 87.2% probability of a 25-basis-point Fed cut, according to the CME FedWatch Tool. The Bank of England is also expected to cut rates this month amid cooling inflation and sluggish economic momentum, especially after the tax hikes announced in the recent Autumn Budget.
Later today, investors will turn their attention to flash inflation figures for the eurozone. Annual inflation is expected to land slightly above the European Central Bank’s medium-term target, though markets broadly expect the ECB to hold rates steady through 2026.
European buybacks poised to lift momentum in 2026
Beyond policy support, analysts at Barclays see room for stronger momentum next year driven by robust corporate share repurchases.
European firms bought back €19.3 billion worth of shares in November 2025 — close to the highest level since 2017. Buybacks represented 2.3% of total equity trading volume last month, with energy and financial companies accounting for more than 2.5% of volume through repurchases alone. Fourth-quarter activity has so far outperformed historical trends.
Barclays highlighted that roughly 70% of announced 2026 buyback authorizations remain unused. The bank’s probability models point to around €50 billion in new buyback announcements in the first quarter.
For 2026, Barclays forecasts earnings per share growth of 8% for European equities. Automakers, telecom operators, and energy firms currently offer the strongest free cash flow yields across sectors.
Oil prices inch higher
Oil prices held a firmer tone on Tuesday as geopolitical tensions persisted and hopes for an imminent peace deal in Ukraine remained uncertain.
Brent crude futures rose 0.1% to $63.20 a barrel, while U.S. West Texas Intermediate futures gained 0.2% to $59.41 a barrel. Both benchmarks advanced more than 1% on Monday, with WTI nearing a two-week high.
Ukrainian President Volodymyr Zelenskiy said Kyiv remains focused on maintaining sovereignty and securing firm security guarantees, but noted that territorial issues continue to be the most difficult point in negotiations. U.S. envoy Steve Witkoff is scheduled to brief Russian officials on Tuesday, though a near-term resolution to the nearly four-year conflict appears unlikely.
Tensions between the United States and Venezuela have also intensified after U.S. officials signaled the possibility of tighter restrictions on Caracas, including potential airspace closures. Venezuela holds some of the world’s largest oil reserves, making any disruption a key market concern.
OPEC+ on Sunday reaffirmed a small output increase for December but confirmed a pause in additional supply growth in the first quarter of next year due to heightened fears of an oversupplied market.
